CRUICKSHANK COMPANY LTD Vs. STRIDEWELL LEATHER PVT LTD
COMPANY LAW BOARD
Click here to view full judgement.
(1.) THIS is a petition under Section 111(4), (5) and (6) of the Companies Act, 1956, filed by Cruickshank and Co. Ltd. (hereinafter called "Cruickshank") and Maharashtra Distilleries Ltd. (hereinafter called "MDL") with regard to 8,000 equity shares in Stridewell Leather Pvt. Ltd. (hereinafter called "Stridewell"). The other respondents in the petition besides Stridewell are Bio Foods Pvt. Ltd. (hereinafter called "Bio-Foods"), the transferor of the impugned shares and Madan Dwaraka Das Chhabria (hereinafter called "MDC"), the transferee of the shares. The paid up capital of Stridewell in May, 1992, when the cause of action arose, was 10,000 equity shares of Rs. 10 each fully paid which were held by four members as follows :
(2.) The case of the petitioners, briefly stated, is that Bio-Foods purportedly transferred its holding of 8,000 equity shares in Stridewell in favour of MDC contrary to the provisions of Article 7 of the articles of association of Stridewell which provides for pre-emptive rights to the existing members of the company, and, as such, the transfer is illegal. According to the petitioners, at the relevant time, the board of the company consisted of five directors, all of whom were employees of the Shaw Wallace group, Bio-Foods ought to have sent, in writing, the offer to sell its holding of 8,000 shares to the other three members of the company, placed the matter before the board for determination of the fair value, and only if the other members had declined the offer, the shares could be transferred to a non- member. Any non-member is also bound by this condition and as such, MDC cannot acquire the shares contrary to the articles. Consequently, neither Bio-Foods nor MDC can validly claim any right as shareholders of Stridewell. The petitioners, though ready and willing to buy the shares, were denied their right contrary to the articles. The petitioners, therefore, prayed for deletion of the MDC and substitution of the name of the petitioners in the register of members.
The petitioners have also filed an application under rule 14 of the Company Law Board Regulations, 1991, for permission to file a joint petition and the same was granted by us.
(3.) A joint reply was filed on behalf of all the respondents signed by one Arun Kumar Jain as a director of respondents Nos. 1 and 2 and as the power of attorney holder of respondent No. 3. The reply contends that the petition is not maintainable for four reasons:.-
(a) It is filed after a lapse of more than two years ;
(b) In C. P. No. 30 of 1993 relating to Stridewell filed before the Company Lay Board in May, 1993, under Section 397/398 of the Companies Act, 1956, one S.K. Bhattacharya is a respondent and is an employee of the Shaw Wallace and Co. Ltd., who is in the know of things, but did not whisper anything about the alleged violation in the reply to that petition ;
(c) In C. P. No. 30 as referred to, the above fact of transfer of shares from Bio-Foods to MDC was mentioned by the petitioners against which the present petitioners did not state anything and now they cannot plead ignorance and, as such, it is an abuse of the process of law ; and
(d) The relief is" purely discretionary which cannot be granted by the Company Law Board, since the petitioners have approached belatedly.;
Copyright © Regent Computronics Pvt.Ltd.